By NEIL HARTNELL
Tribune Business Editor
The real estate investment threshold for economic permanent residency should be increased from $750,000 to at least $1m, a well-know realtor argued yesterday.
Mario Carey, the Better Homes and Gardens Real Estate MCR Group principal, asserted to Tribune Business that this would be a better alternative to increasing real property tax rates on high-end homes as some Bahamians have increasingly called for.
But, suggesting that the Government go in a different direction, Mr Carey said: “The worst thing they can do is increase the taxes on the wealthy with regards to real estate, the real property tax. I think that would hurt the most.
“I think they should up the threshold for permanent residency from $750,00. I think they should increase the threshold; I don’t see why it can’t be $1m or $1.25m. I don’t see why not. I think The Bahamas has set itself as a standard. We’re on a nice run right now, everybody in the real estate business, but everyone will tell you the bubble will go somewhere. It will end, and what that will look like, nobody knows.”
Several observers, including at least one other realtor, have publicly argued that The Bahamas should exploit the current real estate surge to boost the Public Treasury by raising real property tax rates on high-end multi-million dollar homes whose owners can most afford to pay.
While this would be a blow for progressive taxation, and potentially increase government revenues at a time when the Public Treasury needs every cent it can get, it has already been met with pushback by other realtors arguing it would drive buyers away and stunt a growing market.
“I’m just amazed at how little input the real estate profession gives to government policies,” Mr Carey added, suggesting that the Davis administration lean on it more for advice. And he is also far from alone in calling for the investment threshold to be increased.
John Delaney, the former attorney general, earlier this year said raising the bar from the present $750,000 qualifying threshold would enable The Bahamas to “get more out of persons choosing to be here” by attracting “a higher financial calibre” of investor to this nation.
This would also bring the real estate investment threshold in line with the $1m minimum that the then-government was eyeing for persons seeking to qualify for economic permanent residency via contributions to sporting, cultural, arts and social development causes - a reform that Mr Delaney hailed as “timely” given The Bahamas’ urgent need to reflate the economy, and attract investment and foreign exchange earnings, post-COVID.
“It’s certainly timely that the Government revisit the threshold figure of $750,000, which was set as a matter of policy. Before that it was $500,000,” the Delaney Partners principal said. “I know others feel it should be brought down for various reasons, but in my view it should never have been lower than that.”
Mr Delaney pointed out that the last Ingraham administration in 2011 established a policy whereby investors who made a real estate purchase valued at $1.5m or above would be accepted for so-called “accelerated” consideration of their permanent residency application.
The $750,000 threshold to qualify for non-accelerated permanent residency was raised as recently as 2018, having been left at $500,000 for some time, due to increasing concerns that the latter figure was resulting in overseas investors competing with middle class Bahamians for real estate. And Mr Delaney said a further increase in the threshold to $1m would also help to improve government tax yields.
“I would be in favour of increasing that real estate threshold because it means we get more out of persons choosing to be here, and it serves to select a higher financial calibre of persons coming to The Bahamas who are able to further contribute to The Bahamas,” he added.
“It should be no less than $1m in terms of realty. If there are going to be other mechanisms and other avenues to qualify [for economic permanent residency], I think starting at $1m should be the threshold entry point, and there could be others up to $1.5m. That’s not an unknown level for us as we’ve have been there from ten years ago.
“In my opinion, we have to be more concerned with achieving a certain level of economic impact, whether it comes from real estate investments or something else. I would say that $1m is a good level of economic impact that indicates the person will be a beneficial contributor to the economy.”